Gold Below ₹1.5 Lakh, Silver Below ₹2.5 Lakh As CME Margin Hike Sparks Sharp Sell-Off

Mumbai: Gold and silver continued to fall sharply on Monday as higher margin requirements on the Chicago Mercantile Exchange (CME) are set to come into effect. The higher margins made trading costlier, forcing many investors to reduce positions, which increased selling pressure in precious metals.

On the domestic market, MCX gold February futures fell 1.77 percent to Rs 1,45,132 per 10 grams during the day. At the same time, MCX silver March futures dropped a steep 6.88 percent to Rs 2,47,386 per kg.

Trigger: change in US Fed outlook

Analysts said the fall in gold and silver began after US President Donald Trump selected Kevin Warsh as the next Chairman of the US Federal Reserve. Warsh is seen as more aggressive on interest rates compared to previous Fed chiefs.

This raised fears of higher interest rates in the US, which usually hurts gold and silver prices because investors prefer interest-earning assets like bonds.

Strong dollar adds pressure

The decline was further supported by a stronger US dollar, rising US Treasury yields, and positive US inflation data such as Producer Price Index (PPI) and core PPI.

A strong dollar makes gold and silver more expensive for buyers using other currencies, reducing demand globally.

Budget impact on domestic prices

Rahul Kalantri, Vice President (Commodities) at Mehta Equities, said domestic bullion also suffered because the import duty on gold and silver was kept unchanged in the Union Budget. This reduced the price advantage for Indian markets and weakened domestic premiums.

Key support and resistance levels

Analysts said gold may find support around USD 4,510 in global markets this week, while silver could get support near USD 68.

In the Indian market, gold has support between Rs 1,39,650 and Rs 1,36,310, while resistance is seen at Rs 1,48,850 and Rs 1,50,950.

Silver has support near Rs 2,48,810 and Rs 2,37,170, and resistance at Rs 2,78,810 and Rs 2,95,470.

Long-term outlook still positive

Despite the current fall, experts said the long-term trend for gold remains positive due to steady central bank buying and safe-haven demand. Silver also continues to benefit from strong industrial demand and limited supply.

However, a report by WhiteOak Capital Mutual Fund advised investors to reduce exposure to precious metals, especially silver, as prices have risen too fast and are highly overvalued compared to historical levels.